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Lord Simon of Glaisdale: My Lords, my noble and learned friend Lord Brightman shook his head.

Lord Falconer of Thoroton: My Lords, any movement of the head of the noble and learned Lord, Lord Brightman, is to be regarded with some significance. I will defer to anything the noble and learned Lord, Lord Brightman, says, but it seems to me that a trustee is entitled to invest in appropriate equities with a view to making money out of the investment and

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in conditional terms that may be a speculation, in the sense that there is a risk that the shares may go up or down. That is not something that is forbidden to a trustee.

The position of the commission will be quite different from that of a trustee; it will have responsibility for administering a sizeable sum of public money, forecast to be £1.67 billion in 2000-2001. It must do so prudently; that means that speculative investment of any kind, such as that open to a trustee, is not open to the commission. I therefore invite the noble and learned Lord to withdraw his first amendment.

In the light of the further consideration resulting from the point the noble and learned Lord made, the Lord Chancellor thought again about the restriction currently contained in Clause 3(3) of the Bill, which is the subject of Amendment No. 25. While it is correct that the commission must not acquire or hold shares in bodies corporate, a specific restriction on the face of the Bill is unnecessary because of the general requirements on NDPBs to which I have already referred. Indeed--I believe this is the point made by the noble and learned Lord, Lord Brightman--the specific restriction is perhaps misleading, because there are other forms of speculative investment in which it would be equally improper for the commission to be involved: speculative investment in property, for example. I am therefore content that, in the interests of clarity, consistency and brevity, the specific restriction regarding the acquisition or holding of shares in bodies corporate by the commission should not appear on the face of the Bill. That and similar matters can be dealt with satisfactorily in the Financial Memorandum between my department and the commission. I therefore accept Amendment No. 25 and hope that I have managed to meet the concerns of the noble and learned Lord.

Lord Simon of Glaisdale: My Lords, I am grateful to the noble and learned Lord for accepting Amendment No. 25 and for, as always, the extremely agreeable way in which he replies, even when he does not accept the amendment. I believe he realises that on the point where my noble and learned friend--who is a transcendent expert on this matter--shook his head, the noble and learned Lord, Lord Falconer of Thoroton, was not right.

I am not wedded to the term "a trustee" but it must be wrong, for the reasons that my noble and learned friend Lord Brightman gave, for us to be legislating to give almost unlimited powers and relying on a Financial Memorandum from the Lord Chancellor's Department to the commission, and the Treasury guidance that governs all accounting officers, to limit what is given on the face of the statute.

I shall seek to return to that matter because I hope that my noble and learned friend the Lord Chancellor will reconsider it and try to bring the powers that are given into line with the powers that are needed and that will be operated. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord Clinton-Davis moved Amendment No. 24:

Page 2, line 43, at end insert (", and
(h) to pay fees and disbursements on account by way of loans to solicitors and barristers.").

The noble Lord said: My Lords, Amendment No. 24 seeks to ensure that the legal services commission will be able to go on making payments on account to solicitors and barristers in respect of work done and disbursements incurred. It is different from other amendments with which we shall be dealing later, though it, too, deals with disbursements.

The payments on account, as I indicated in earlier debates and as is known to practising lawyers in the House, were introduced because it was considered to be unreasonable to make lawyers wait until the end of a case before receiving any payment. It was an imposition upon their ability to function effectively without undue overdraft facilities, and so on. Indeed, it replicated the practice in privately funded cases, which still goes on, whereby disbursements are invariably collected by the solicitor from the client. When the legal services commission enters into contracts with practitioners, those contracts may well provide for payment on a regular basis, at regular stages, rather than requiring lawyers to wait until the conclusion of the case before payment is made. In my submission, it is important to ensure that payment on account can be made in cases funded on an individual basis. This provision would put the matter beyond all doubt.

This is a matter of considerable importance to those who presently practise in the area of legal aid work. By and large, they are not practices which are well capitalised. The requirement in the Bill would add to the need to obtain overdraft facilities--it would duplicate that--and would indirectly create a burden for the client as well as for the solicitor. I am not suggesting the amendment in order simply to reward the solicitor in some misbegotten way; what I am suggesting is an essential element of being able to carry on a practice in the sort of firms to which I have alluded in earlier debates. I refer to high-street firms which would be severely embarrassed if the amendment is not passed. I beg to move.

Lord Borrie: My Lords, with due respect to my noble friend, I should like to express a feeling of some discomfort about the amendment. I know that my noble friend did not emphasise the word "loans", but that word does appear in the amendment. The purpose of the clause is the use of public funds to enable people to finance their legal claims, not to assist the providers of legal services.

In so far as loans may be made by the commission to solicitors or barristers, I ask: at what rate? If loans are to be made at the commercial rate, I point out that lawyers, assuming that they are always (or almost always) credit-worthy, can obtain loans in the normal way, just like anybody else. If, on the other hand, my noble friend is suggesting that a rate lower than the commercial rate should be charged, that would be a subsidy to lawyers at public expense. As I have said, the purpose of these provisions is to enable taxpayers' money, through the

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commission, to be made available to people who might otherwise be unable to pursue claims; it is not to assist lawyers.

In an effort to be constructive, perhaps I may ask my noble friend whether he has considered the Credit Unions Act 1979. In a consultation paper, the Government propose to make that law and the creation of credit unions more flexible. Even under the present law, there is surely no doubt, to use the words in the Act, that solicitors have a common bond between them. Surely barristers have a common bond. Perhaps my noble friend would consider that as a constructive way in which loans at rather less than normal commercial rates obtainable from banks might be available to solicitors and barristers.

I am not expressing outright opposition to a proposition which my noble friend puts forward on a reasonable basis, but I am questioning whether it has been adequately thought through.

6.15 p.m.

Lord Meston: My Lords, I declare an interest as someone who is a grateful beneficiary of the payment-on-account scheme. I do not regard this as a debate about loans, but see this as an opportunity (provided by the noble Lord, Lord Clinton-Davis, and his amendment) to ask for confirmation from the Government that the payment-on-account scheme, or something like it, will be preserved under the Bill. It is a fact that many lawyers in practice depend on the scheme for their existence and credit arrangements. For many of us, it is, frankly, the lifeblood by which we are able to continue in practice. I hope, therefore, that the Government will give an indication--either with regard to this amendment or at some other appropriate point--that the payment-on-account scheme will continue in existence.

Baroness Crawley: My Lords, like my noble friend Lord Borrie, I am hesitant about the amendment. If I understand it correctly, the amendment, which stands in the names of my noble friend, Lord Clinton-Davis, and my noble and learned friend Lord Archer, would require the legal services commission to act as a banker to private solicitors and barristers. Given the reluctance of my bank to loan me anything other than an ear, the amendment, if passed, would act as an inducement to me to take up the legal profession as a late career move.

It is rather a tall order to expect, within the reforming context of the Bill, limited public funding to be made available to solicitors to "sub" them when they are left a bit short in the course of their professional work. Therefore, I cannot support the amendment.

Lord Clinton-Davis: My Lords, does my noble friend realise that, as the noble Lord, Lord Meston, said, with legal aid, moneys are paid on account of profit costs and in respect of disbursements? That is the current situation.

Baroness Goudie: My Lords, I am totally against the amendment and agree with my noble friends Lord

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Borrie and Lady Crawley. I understand fully the present situation as regards legal aid whereby solicitors and barristers are enabled to obtain fees on account of costs, but that is after the work has been done and the disbursements spent, not before.

The amendment makes it clear that it is asking not for money on account of costs, but,

    "on account by way of loans".
That is completely different. It would be a disgrace if public funds were used in that way.

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